Published On: Fri, Mar 25th, 2011

Oil Trades Near Two-Day Low U.S. Economic Outlook; JPMorgan Raises Brent

Oil traded near a two-day low in New York as speculation of reduced demand in the U.S. outweighed concern the Libyan conflict and unrest in the Middle East will further disrupt supply.

Futures dropped from the highest in more than two years yesterday after durable-goods orders in the U.S., the world’s largest oil consumer, unexpectedly fell in February. JPMorgan Chase & Co. raised its forecast for London-traded Brent crude as Allied warplanes carried out more strikes against ground forces loyal to Libyan leader Muammar Qaddafi.

“The market now wants to refocus on economic data and what’s actually happening out there in the world rather than the Gulf,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “The fact that it hasn’t moved on from these levels suggest that people are discounting the concerns” about Libya and the Middle East.

Crude for May delivery was at $105.42 a barrel in electronic trading on the New York Mercantile Exchange, down 18 cents, at 1:45 p.m. Singapore time. It declined 15 cents to $105.60 yesterday. On March 23, the contract settled at $105.75 the highest since Sept. 26, 2008.

Prices have climbed 4.3 percent this week, the first gain in three, and are up 31 percent from a year earlier.

U.S. orders for goods meant to last at least three years decreased 0.9 percent last month, according to a Commerce Department report yesterday. Economists surveyed by Bloomberg News expected a median 1.2 percent increase.
Brent, JPMorgan

Brent crude for May settlement on the London-based ICE Futures Europe exchange was at $115.63 a barrel, down 9 cents, or 0.1 percent. Yesterday, it rose 17 cents, or 0.2 percent, to $115.72, the highest since March 9.

Brent will average $118 a barrel in the second quarter because of export halts in Libya, JPMorgan said in a monthly report e-mailed today. Prices may “spend some time” above $120 and reach as high as $130, according to the second-largest U.S. bank. Futures last traded at the level in July 2008.

New York crude has rallied 25 percent since protests began Feb. 15 in Libya, a member of the Organization of Petroleum Exporting Countries. The conflict is the bloodiest in a wave of uprisings that has toppled the presidents of Tunisia and Egypt and spread to Algeria, Bahrain, Iran, Oman, Syria and Yemen.
‘Tolerance Friday’

Yemen’s strengthening opposition movement plans to march to the Presidential Palace today and hold nationwide protests as government supporters pour into Sana’a, the capital, for a rally dubbed “Tolerance Friday.”

Libya’s crude exports may be curbed for months due to sanctions and damage to production facilities, the International Energy Agency said March 15. The country is the third-biggest producer in Africa and holds the continent’s largest reserves.

Shipments from OPEC will drop to the lowest since October because of Libya’s civil war, according to tanker-tracker Oil Movements in Halifax, England. The producers’ group, which pumps 40 percent of the world’s crude, may raise official output targets at its next meeting June 8, said David Kirsch, an analyst at PFC Energy, a consultant in Kansas City.


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